Center for World Conflict and Peace

Saturday, March 9, 2013

Russia’s Uncertain Position in post-Chávez Venezuela

The
domestic and regional implications of the death of Hugo Chávez are numerous and
wide-ranging, but unique to Venezuela is the reverberations the death of its
leader will have in faraway Russia and Eastern Europe. With the passing of “El
Comandante," it’s possible that Russia’s geopolitical influence in Latin
America may weaken and that it’s arms exports will decline, directly
affecting Russia’s economic growth. Much of this depends on who succeeds Chávez
and what sort of relationship his successor pursues with Russia.

In
the 21st century, Russia has had a tendency in its foreign policy to
pursue relations with smaller, less powerful, but in many cases very central,
states in regions around the world (i.e. Serbia in the Balkans, Syria in the
Middle East, etc.) in an effort to increase its own role in the so-called “multi-polar”
world. While Russia’s major ally in Latin America is actually Brazil, Russia
has found Venezuela to be a willing partner in supporting Russia’s own foreign
policy, with Venezuela even going so far as to (hypocritically) recognize South
Ossetia’s declaration of independence from Georgia while opposing Kosovo’s
independence from Serbia because of the “bad precedent” it would set.
Venezuelan vice president Nicolás Maduro said that "the unipolar world is
collapsing and finishing in all aspects, and the alliance with Russia is part
of that effort to build a multipolar world."

Russia’s
ties with Venezuela as its Latin American partner was a perfect match-
Chávez was an outspoken critic of the United States and his country controlled vast
reserves of energy, which gave Russia an excellent opportunity to exert
its influence in the country and counter American power in the region, namely, by combining mutual feelings on U.S. influence abroad with the capacity
to develop Venezuela’s energy industry. Venezuela was billed as a regional
leader for Latin America. For while Chávez’s leftist administration was one of
several that proliferated throughout the region, his had been by far the most vocal
(it is not uncommon, in fact, for Latin American governments to be relatively
aligned on the right-left spectrum, with rightist governments predominating in
the 1970’s and 80’s). Chávez carefully developed relations with Evo Morales of
Bolivia, Rafael Correa of Ecuador and the two most recent Argentine
administrations, that of the late Nestor Kirchner and his wife Crisitina
Fernández (who succeeded her late husband in 2007). His flamboyant anti-American
rhetoric was occasionally balanced out by Brazil’s center-left president InácioLula da Silva and Lula’s successor, Dilma Rousseff.
Nevertheless, Venezuela provided a beacon through which Russia was able to
exert geopolitical influence in a region far beyond its periphery.One of the
biggest areas of cooperation between Russia and Venezuela is the energy sector,
a fact recently underscored by Vladimir Putin’s decision to send Igor Sechin, CEO of
Russia’s state owned oil company Rosneft, as a special presidential envoy to Hugo
Chávez’s funeral. Venezuela has the largest proven reserves of crude oil in the
world, but the oil is in need of a more intense refinement process than most
other crude supplies around the world. Russia has the technological
capabilities Venezuela needs to refine its heavy crude, and Russian energy companies
are active in several aspects of the Venezuelan energy industry. Russian
companies plan to invest $17.6 billion in Venezuela by 2019 and
multiply energyoutput fourfoldin an attempt to expand
cooperation to offshore areas and oil services, according to Reuters. Sechin has said Rosneft will finance production with loans
from Russian banks and credit lines from international banks. Because the
Venezuelan economy is currently in shambles, it is highly likely that the
Russian-Venezuelan energy cooperation will continue, with the possibility that
if a government friendlier to the United States should take power, existing
contracts with Russian companies would continue, but that American companies
would be invited to participate in new ventures.

The
situation in Venezuela may actually effect Russia’s energy relations with one
of its Eastern European neighbors- Belarus. Belarus has had a rather unique
relationship with Russia, and is part of a “union state” with Russia. Yet since
2007, the one thorn in the side of Belarus-Russia relations has been energy,
mainly because of a dispute which emerged when Russia accused Belarus of
siphoning Russian gas transported through Belarus and selling it at world
market prices (Belarus had enjoyed Russian gas at a discounted price). When
Russia refused to meet Belarusian quotas for energy imports, Belarus turned to
Venezuela for energy imports starting in 2010, with energy shipped via tankers
from Venezuela to the Ukrainian port of Odessa, then up to Belarus through a
pipeline. Belarus has sought 23 million tons of oil from Russia for 2013, but
Belarusian President Aleksandr Lukashenko has stated that if Russia will only
sell Belarus up to 18 million tons (as it has stated) and it will import energy
from Venezuela and Azerbaijan. Yet if Venezuela for any reason suspends its
sales of energy to Belarus, this may give Russia more leverage over Belarus as
it (Belarus) will have lost a valuable supplier of alternative energy. This
situation seems unlikely since Venezuela can only benefit from the influx of
cash, but is still an example of how far reaching the implications of the
upcoming transfer of power in Venezuela really are.

After
energy, Russia’s most valuable export is armaments and military hardware.
Chávez constantly feared a U.S. invasion of Venezuela, and had been engaged in
a long-standing dispute with neighboring Colombia over the presence of U.S.
troops in Colombia (these U.S. troops including most notably the U.S.’s élite
Special Forces, whose purpose is to assist with counter-narcotics and
counter-insurgency). This, in principle, was the basis for his decision to enter
into contractual agreements with Russia regarding arms sales. Venezuela is the
second-largest customer for Russian military hardware (after India), and as
Russia’s economy is famously lacking in diversity of exports outside of energy,
a willing market for arms is greatly welcomed (a situation only enhanced by the
instability in another major importer of Russian arms- Syria). In 2009, then-Secretary of State Hillary Clinton warned of a possible arms race between
Colombia and Venezuela.

Since
2006, the gross income for Russian military sales abroad has doubled, and
Russian arms sales are now almost exclusively handled through state-owned
company Rosoboronexport. Chávez’s death, however, could reduce Russia’s client
relationship with Venezuela in the arms industry, depending on how the succession
plays out. It would be easy to assume that Nicolás Maduro, Venezuela’s vice
president, would succeed the late Chávez, yet Venezuela’s opposition is
relatively strong. The Venezuelan economy, despite the strength of the
country’s crude reserves, is not entirely healthy, and if the Venezuelan
opposition ends up in power they may decide that it is not economically viable
to have such contracts arms with Russia. Viachelav Nikonov, deputy chair of the
Russian Parliament’s committee on foreign affairs, has stated that he does not
believe a new Venezuelan administration would be able to opt out of currently existing contracts, but future contracts may not be pursued.

Given
the fragile state of Venezuela’s economy, Russia will most likely remain a
major player in Venezuela’s foreign relations, because even if the opposition
were somehow to come to power, Russian participation in the country’s energy
sector is still largely necessary for it to be able to produce energy in
adequate amounts and at sufficient levels of refinement. Yet Russia may lose a
large part of its customer base in the armaments industry, and if a right-wing
administration comes to power, or at least a Chávez lieutenant who seeks to
improve relations with the United States, Russia may also find itself with less
of a partner in the geopolitical arena of countering U.S. influence in Latin
America.